MBS Live Recap: Bonds End Roughly Flat After a Few Lead Changes

First thing's first: putting too much time/thought into the writing or reading of bond market analysis this time of year isn't really necessary. If that changes, rest assured I'm watching out for such things and ready to discuss them.  

If it doesn't change, however, well...  this is going to sound fairly familiar.

The biggest market mover of the day was illiquidity, with light volume a close second.  These 2 factors (typical of the 2nd half of December) grease the skids for an imbalance between buyers and sellers to have a bigger impact than it normally would.  The net effect is movement in bonds WITHOUT any overt justification.

Two such moves emerged today, first in the late morning hours when bonds rallied down to slightly stronger yield levels and then in a more gradual way during the afternoon hours when the gains evaporated.  Before all that, there actually was a somewhat logical response to this morning's weaker Philly Fed data, but it could also have drawn strength from the technical ceiling at 1.95% in 10yr yields.

By the end of the day, yields were effectively unchanged.  The intraday range remained on the small side.  And the broader trend toward higher yields remained intact (the caveat being that the trend has yet to break 1.95% in a sustainable way).